In this guide, we’ll help you to calculate how much stamp duty you will pay when it comes to buying a commercial or non-residential property. We’ll also talk you through ways that you can reduce your liability.

What is Stamp Duty Land Tax (SDLT)?

Stamp Duty Land Tax is a tax that is charged on any property or piece of land that is purchased in the UK. The amount of tax that will be payable will depend on the price of the property at purchase and whether it is residential or not. The method used to calculate residential stamp duty was amended in 2014.

You will need to pay stamp duty in any of the following situations.

• You buy a freehold property
• You buy a new or an existing leasehold
• You buy property using the shared ownership scheme
• You transfer land or property in exchange for a payment

 

Do I need to pay stamp duty on commercial and non-residential property?

When it comes to buying a non-residential property in either England or Wales, you will still need to pay stamp duty. You will need to pay this to the inland revenue for assets over £150,000.

You will need to pay stamp duty on any non-residential assets whether they are freehold or a new or existing leasehold.

Examples of commercial, non-residential property

Here are some examples of the type of property that are non-residential:

• Shops
• Offices
• Farmland
• Forests
• Warehouses
• Factories
• Garages and workshops
• Mixed-use properties
• Residential property with more than a specified number of units
• Buy-to-let properties

 

How is stamp duty calculated?

Stamp duty for both residential and commercial properties is charged on the purchase price. It is worked out based on a proportion of the property’s value in each tax band.

The great news is that you don’t have to pay stamp duty on the first £125,000 for residential purchases and £150,000 for commercial properties.

For example, if you bought a commercial property for £190,000, you wouldn’t need to pay stamp duty on the first £150,000, then you would pay 2% stamp duty on £40,000.

When you complete a purchase, you have two weeks in which to send your stamp duty return to HMRC.

How do you pay Stamp Duty?

When it comes to dealing with the payment of stamp duty, your solicitor will handle the stamp duty return forms, however, you can do it if you would prefer. As the homeowner, you are responsible for ensuring your stamp duty is submitted on time.

Can you add Stamp Duty to your mortgage?

You are not able to add stamp duty to your mortgage as it needs to be paid in one lump sum within two weeks of the purchase. If you have a larger deposit amount, you may be able to use some of this to pay your stamp duty. You will need to then ask for a larger loan. If you choose to increase your mortgage debt, then it will cost you more in the long run because of the interest.
Stamp duty on commercial property
Stamp duty applies to commercial properties.

This table shows the current stamp duty bands and rates.

Leasehold Non-residential (Commercial property) Stamp Duty Land Tax rates

When you buy a leasehold property, you will be required to pay stamp duty on both the value of the annual rent and the purchase price.

Stamp duty on a second property

There are higher rates of stamp duty that will apply when you are buying a second home. This includes buy-to-let properties and holiday homes. The rate of stamp duty that you will pay is 3% higher than the rates for residential properties as listed above.

An example of this would be if you were to buy a holiday home for £250,000, then 3% stamp duty would be charged on the purchase price of the first £125,000 and then 5% stamp duty would be charged on the remaining £125,000.

There is also an additional 3% surcharge for residential properties which are purchased by companies. For any properties worth more than £500,000 that have been bought by a company, a 15% charge may apply.

Property purchases from 1 April 2021

For properties bought after April 1st 2021, the thresholds for stamp duty will be as follows:

• £125,000 for residential property
• £150,000 for non-residential property

 

Stamp Duty Land Tax Reliefs

There may be some transactions which will qualify relief and reduce the amount of tax you will pay. These include:

Group Relief: If the property is owned by a company that is with a group with the purchaser, then there will be no stamp duty to pay.

Charities Relief: It is possible for charities to get stamp duty relief when they buy land for charitable purposes. There may also be a partial relief if the purchase is made jointly with non-charitable partners. If the charities status ends within three years, then HMRC can end the relief.

Calculators & Tools

How to use our stamp duty calculator

Firstly, enter the price of the property. Then select the location of the property that you wish to buy. There are four choices here because Scotland has abolished Stamp Duty Land Tax and have replaced it with Scottish Land and Buildings Transaction Tax (LBTT). In Wales, there is the Land Transaction Tax (LTT). England and Northern Ireland both have the same Stamp Duty Land Tax.

Next, you will need to select the property type.

If you select residential properties in England and Northern Ireland, you will need to select whether you are a first-time buyer. The bandings are different for first-time buyers and those buying their home through a shared ownership scheme.

*Please note, this calculator assumes it’s a freehold residential property, it does not calculate commercial transactions or leasehold properties.

The calculator is built upon the residential property rates provided Stamp Duty Land Tax as of 11/12/2017.

It has been updated with the temporary change announced Stamp Duty Land Tax for the period of 8 July 2020 until 31 March 2021.

We will update this calculator inline with Government Guidelines for Stamp Duty Land Tax (SDLT) in March 2021.

The widget is provided as a guide only and users should always seek professional advice from a certified accountant/solicitor. Get in touch with us now for further help.

Get in touch

Stamp duty is an essential part of buying a property and it is important that you understand what you will need to pay.

If you need any advice on calculating the stamp for a property that you are purchasing, get in touch today.